Study On The Impact Of Financial Fraud Risk To External Audit Quality

Under the new normal economy in our country,economic downward pressure continues to increase,our country securities market for business performance have higher requirements,market environment cause great pressure to the operating performance of listed companies.In this context,the financial fraud cases of listed companies are increasing day by day,and the CPA,as a relative guarantee of the authenticity of the financial report of listed companies,faces a higher audit risk.Excessive audit risk may lead to low quality of external audit,and reality also confirms this,certified public accountants and accounting firms have been repeatedly punished by the SFC and China securities regulatory commission for auditing quality issues.In the background of the increasingly prominent external audit quality problems,the risk oriented audit mode which focuses on audit risk assessment and identification has emerged.And financial fraud risk is an important component of audit risk,therefore,based on risk-oriented audit mode,study the influence of the financial fraud risk external audit quality,find out the ways to identify financial fraud risk become an effective way to improve the external audit quality.This paper takes China's a-share listed companies from 2012 to 2016 as sample,and base on the theoretical analysis of the influence of financial fraud risk on external audit quality.From three financial characteristics aspects: solvency,asset quality,operational excellence,and equity structure,board characteristics two nonfinancial characteristics angle,to build the financial fraud risk identification index.By analyzing the situation of accounting firms in 2016 and the frequently used external audit quality surrogate indicators in previous studies,constructs the alternative indicators of external audit quality,checking the quality of financial fraud risk to external audit.The study found that the higher the risk of financial fraud,the lower the external audit quality of certified public accountants.In the five significant variables that affect the risk of financial fraud,such as asset size,other receivables ratio,loss,ROE level and board size,and the board size of assets is higher,other receivables ratio is higher,smaller by the board of directors of the listed company,hired bythe corresponding external certified public accountants audit quality is higher.Therefore,the evaluation and monitoring of relevant indicators can be strengthened from three perspectives of certified public accountants,accounting firms and audit supervision departments,which is conducive to improving the quality of external auditing.